Stocks Stage an Early Rebound - TheStreet

Updated from 6:46 a.m. EDT

Stocks in New York bounded higher at Tuesday's open following a massive selloff in the previous session.

The

Dow Jones Industrial Average

was up 204 points at 10,569, and the

S&P 500

was adding 28 points to 1134. The

Nasdaq

climbed 49 points to 2033.

On Monday, stocks got crushed after the House of Representatives voted down the

Treasury Department's

$700 billion financial-sector stabilization plan. The Dow plunged 777 points, or 7%, its worst single-day loss ever in terms of points and its worst percentage loss since Sept. 17, 2001. The S&P 500 gave up 8.8%, and the Nasdaq fell 9.1%.

After the bailout failed to pass in Congress, banks were becoming increasingly worried about lending to one another, as the London interbank offered rate on overnight dollar loans skyrocketed more than four percentage points to 6.875%, a record high according to

Bloomberg

data.

On Monday, overnight dollar Libor, a measure of rates that a group of banks charge for short-term loans to other banks, stood at 2.57%.

Traders had anticipated passage of the Treasury's program, which would provide liquidity in installments to financial firms in exchange for mortgage-backed securities and other hard-to-value assets. Ahead of Tuesday's session, lawmakers were rushing to put together another proposal and quell the market's anxiety.

Fitch Ratings said it may cut its credit rating on

Citigroup

(C) - Get Report

following the bank's announcement that it would buy

Wachovia

(WB) - Get Report

and take on $53 billion in Wachovia debt.

A report in the

Financial Times

Monday indicated that

Goldman Sachs

(GS) - Get Report

, which amid the credit crisis agreed along with

Morgan Stanley

(MS) - Get Report

to become a bank holding company instead of an investment bank, was looking to buy as much as $50 billion in assets from other banks.

As the credit crisis continued to manifest itself in Europe, the governments of Belgium, France and Luxemburg said they would allocate $9.24 billion in emergency funding to Belgian lending firm

Dexia

. Dexia's Chairman, Pierre Richard, resigned along with CEO Axel Miller.

Outside the financials, pharmaceutical concern

Pfizer

(PFE) - Get Report

announced it will stop making medicine to treat heart disease.

Shifting to economic data, the Case-Shiller home-price index fell 16.35% year over year for July, a slightly wider decline than the 16% expected by economists.

The Chicago Purchasing Managers Association is set to release its September manufacturing index. The Conference Board's consumer confidence survey is also due this morning.

In commodities, crude oil was advancing $1.75 to $98.12 a barrel. Gold was losing $4.80 to $889.60 an ounce.

Longer-dated U.S. Treasury securities were falling in price. The 10-year was down 14/32 to yield 3.63%, and the 30-year was giving back 21/32, yielding 4.15%. The dollar was rising vs. its major foreign competitors.

Abroad, markets were mixed. The FTSE in London was ticking higher, and the Hang Seng in Hong Kong closed with gains. Frankfurt's DAX was taking losses, and Japan's Nikkei ended on the downside.